QST Limited (Now Premier Pipes Limited), Kanpur V. Dy. Commissioner of Income Tax-V, Kanpur

ITA 766/LKW/2013

• Counselvise Citation: 76623714 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Assessee Lawyers: S K GARG; P K KAPOOR
• Keywords: Unexplained investment; Principle of natural justice; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 766/LKW/2013 ASSESSMENT YEAR: 2003 - 04 QST LIMITED (NOW PRIMIER PIPES LIMITED) SOM BUS INESS SQUIRE 4 TH FLOOR, 1, THE MALL KANPUR V. DY. CIT - V KANPUR PAN: AAACQ0251E (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: S/SHRI. S. K. GARG, ADVOCATE & P. K. KAPOOR, C.A RESPONDENT BY: SHRI. R. K. RAM, D.R. DATE OF HEARING: 06.01.2014 DATE OF PRONO UNCEMENT: 07.03.2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON VARIOUS GROUNDS WHICH ARE AS UNDER: - 1 . BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN MAKING /UPHOLDING AN ADDITION OF RS.17,99,042/ - ON ACCOUNT OF PURCHASE OF H.R. COILS, ALLEGED TO HAVE BEEN MADE BY THE 'APPELLANT' FROM J.S. JAIN AGRO INDUSTRIES (P) LTD SHAMLI AND NOT ACCOUNTED FOR IN ITS BOOKS. 2 . BECAUSE IN SUPPORT OF ITS CONTENTION THAT S UCH PURCHASES HAD : - 2 - : BEEN MADE BY THE 'APPELLANT' IT HAD PLACED ON RECORD COGENT MATERIAL AND INFORMATION, AND ON A DUE AND PROPER APPRECIATION OF THE SAME, THE ADDITION OF RS.17,99,042/ - AS ABOVE DESERVES TO BE DELETED. 3 . BECAUSE THE AUTHORITIES BELOW HAVE ERR ED IN LAW AND ON FACTS IN MAKING/UPHOLDING A FURTHER ADDITION OF RS.1,79,904/ - ON ACCOUNT OF PROFIT CALCULATED AT THE RATE OF 10% OF THE PURCHASE OF H.R. COILS, AS HAVE BEEN WRONGLY INFERRED TO HA VE BEEN MADE BY THE 'APPELLANT' FROM M/S J.S. JAIN AGRO INDU STRIES (P) LTD. 4 . BECAUSE THERE BEING NO PURCHASES OF H.R COILS OF THE VALUE OF RS.17,99,048/ - MADE BY THE 'APPELLANT', PROFIT AMOUNTING TO RS.1,79,904/ - THEREON HAVE BEEN MADE/SUSTAINED ON A WHOLLY WRONG PREMISE, WITHOUT GIVING DUE CONSIDERATION TO THE MATER IAL AND INFORMATION BROUGHT ON RECORD BY THE 'APPELLANT', AND THE SAME DOES NOT DESERVE TO BE SUSTAINED. 5 . BECAUSE THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING ADHOC DISALLOWANCE AS HAD BEEN MADE IN THE ASSESSMENT AS PER PARTICULARS GIVEN BELOW: - SL .NO. HEAD OF EXPENDITURE ADHOC DISALLOWANCE (RS.) (I) GENERAL EXPENSES 20,000 (II) OFFICE EXPENSES 20,000 (III) TRAVELLING AND CONVEYANCE 20,000 6. BECAUSE LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE PARTICULARLY THAT : - 3 - : A) THE ''APPELLANT' IS A PUBLIC LIMITED COMPANY WHICH HAD M AINTAINED BOOKS OF ACCOUNT AND OTHER RECORDS, ON DAY - TO - DAY; B) NO DEFECT OR DISCREPANCY IN SUCH BOOKS OF ACCOUNT HAD BEEN FUND AT ANY STAGE; AND C) THE ISSUE IS COVERED (IN FAVOUR OF THE 'APPELLANT') BY THE DECIS ION OF HON'BLE IT AT, ALLAHABAD BENCH, ALLAHABAD, WHICH HAS A BINDING EFFECT. NO DISALLOWANCE EITHER ON FACTS OR IN LAW COULD HAVE BEEN MADE. 7. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS LAW AND PRINCIPLES OF NATURAL JUSTICE. 2 . DURIN G THE COURSE OF HEARING OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS OPTED NOT TO PRESS GROUNDS NO.2 AND 4. ACCORDINGLY GROUNDS NO.2 AND 4 ARE DISMISSED BEING NOT PRESSED. 3 . GROUNDS NO.1 AND 3 RELATE TO THE ADDITION MADE ON ACCOUNT OF PURCHASE OF H.R . COILS FROM M/S J.S. JAIN AGRO INDUSTRIES (P) LTD. SHAMLI (HEREINAFTER REFERRED IN SHORT 'JSJAI') AND PROFIT EARNED THERE ON @ 10%. 4 . THE BRIEF FACTS BORNE OUT FROM THE RECORD IN THIS REGARD ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE H AS FILED THE LIST OF DEBTORS AND CREDITORS GIVING THE DETAILS OF AMOUNT/BALANCE AS ON 31.3.2003 RECEIVABLE FROM THE DEBTORS AND PAYABLE TO THE CRED I TORS. A SUM OF ` 17,98,142.70 WAS SHOWN A S DEBIT BALANCE I.E. RECEIVABLE FROM JSJAI. IN ORDER TO VERIFY THE CORRECTNESS OF THE DETAILS SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER ASKED JSJAI TO FURNISH COPY OF ACCOUNT AND IN RESPONSE THERETO JSJAI HAS FURNISHED COPY OF ACCOUNTS WHICH IS REPRODUCED AS UNDER: - : - 4 - : DOCUMENT DATE DOCUMENT NUMBER NARRATION DEBIT C REDIT RUNNING BALANCE QST LTD., KANPUR OPENING BALANCE 17,98,142.70 CR. 02 MAY 2002 SAL 02052002 5 TO INVOICE NO.102 3,95,181 14,02,001.70 CR. 07 MAY 2002 SAL 07052002 3 TO INVOICE NO.113 4,20,811 9,82,150.70 CR. 02 MAY 2002 SAL 12052002 7 TO INVO ICE NO.119 4,18,828 5,63,322.70 CR. 14 MAY 2002 SAL 14052002 2 TO INVOICE NO.125 2,85,884 2,77,438.70 CR. 15 MAY 2002 SAL 15052002 2 TO INVOICE NO.127 2,78,338 899.30 DR. TOTAL/CLOSING BALANCE 17,99,042 899.30 DR. 5 . FROM THE ABOVE DETAILS, THE ASS ESSING OFFICER NOTICED THAT THE ASSESSEE - COMPANY HAS PURCHASED GOODS FOR A SUM OF ` 17,99,042 ON DIFFERENT DATES AS MENTIONED ABOVE. A COPY OF THE LETTER AND COPY OF ACCOUNT RECEIVED FROM JSJAI HA VE BEEN PROVIDED TO THE ASSESSEE AND IN RESPONSE THERETO THE ASSESSEE HAS STATED THAT THE ASSESSEE - COMPANY HAS NOT PURCHASED ANY GOODS FROM JSJAI. AFTER CONSIDERING THE REPLY OF THE ASSESSEE , A LETTER DATED 20.1.2006 W AS WRITTEN TO JSJAI AND THE FACT AS STATED BY THE ASSESSEE HAS BEEN INTIMATED AND JSJAI WAS REQUI RED TO SUBMIT THE PHOTOCOPY OF INVOICES AND NECESSARY EVIDENCE REGARDING TRANSPORTATION OF GOODS AND RECEIPTS AND DISPATCH OF GOODS. CONSEQUENT THERETO, JSJAI VIDE THEIR LETTER DATED 24.2.2006 HAS FURNISHED THE COPY OF BILLS AND COPY OF TRANSPORT RECEIPTS ISSUED BY M/S DEEP GOODS CARRIER, RAILWAY ROAD, SHAMLI. THE PHOTOCOPIES OF LETTER DATED 24.2.2006 AND COPIES OF BILLS AND TRANSPORT RECEIPTS HAVE BEEN PROVIDED TO THE ASSESSEE VIDE LETTER DATED 28.2.2006 AND THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY THE AMOUNT OF SALE MADE BY THE ABOVE PARTY TO THE ASSESSEE SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE BEING UNACCOUNTED PURCHASE. IN RESPONSE THERETO, THE ASSESSEE HAS FILED AN AFFIDAVIT OF ITS DIRECTOR, SHRI. S. S. AGARWAL DISPUTING THE SAL ES MADE BY JSJAI TO IT (THE ASSESSEE), BUT HE HAS NOT FILED ANY CONFIRMATION OF ACCOUNT OF JSJAI AS : - 5 - : APPEARING IN ITS BOOKS OF ACCOUNT. THE ASSESSING OFFICER HAS ALSO NOTED THAT T HE PURCHASES MADE FROM JSJAI AND SUBSEQUENT SALES THEREOF ARE NOT RECORDED IN THE BOOKS OF ACCOUNT . H E ACCORDINGLY MADE AN ADDITION OF ` 17,99,042 TOWARDS UNEXPLAINED INVESTMENT IN PURCHASE AND A SUM OF ` 1,79,904 BEING 10% OF ` 17,99,042 AS PROFIT, WAS ALSO ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6 . AGAINST THE ABOVE ADDITION , THE A SSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND FILED WRITTEN SUBMISSION STATING THEREIN THAT THE EVIDENCE COLLECTED AT THE BACK OF THE ASSESSEE SHOULD BE TESTED THROUGH CROSS - EXAMINATION AND ALSO REQUESTED THE ASSESSING OFFICER TO SUMMON THE RESPONS IBLE DIRECTOR OF JSJAI FOR CROSS - EXAMINATION, BUT THE ASSESSEE WAS NOT ALLOWED AN OPPORTUNITY TO CROSS - EXAMINE THE RESPONSIBLE DIRECTOR OF JSJAI. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS NOT SUSTAINABLE. 7 . THE LD. CIT(A) RE - EXAMINED THE ENT IRE ISSUE BUT WAS NOT CONVINCED WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE AS HE WAS OF THE VIEW THAT IN ITS BOOKS OF ACCOUNT THE ASSESSEE HIMSELF HAS SHOWN DEBIT BALANCE OF ` 17,98,142.70 IN THE NAME OF JSJAI AS ON 31.3.2002. BUT TILL CONCLUSION OF T HE APPEAL BEFORE THE LD. CIT(A), NO EVIDENCE WAS PLACED WITH REGARD TO THE RECOVERY OF THE SAID AMOUNT IF THE ASSESSEE HAS NOT MADE PURCHASE FROM JSJAI IN ORDER TO SQUARE UP THE ACCOUNT. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) IN THIS REGARD ARE EXTRA CTED HEREUNDER: - I HAVE GONE THROUGH THE CONTENTION OF A.O. & REPLY FILED BY THE A SSESSEE. FROM THE ABOVE, FOLLOWING FACTS EMERGE. 1. THE ASSESSEE CLAIMS THAT HE HAD MADE NO PURCHASE FROM M/S J.S. JAIN AGRO & THAT THE AMOUNT WAS DUE FROM THEM & THEY HAVE WRONGLY REVERSED THE ENTRY BY SHOWING SALE TO THEM. 2. ASSESSEE HAS POINTED SEVERAL DISCREPANCIES IN THE BILLS TO INDICATE THE SALE WAS NOT GENUINE. : - 6 - : 3. ASSUMING THAT IF THE CONTENTION OF THE ASSESSEE IS TRUE THEN THIS IS A FRAUD PERPETUATED BY J.S. JAIN AGRO & THE ASSESSEE SHOULD ATLEAST HAVE FILED AN FIR OR COURT CASE TO CLAIM HIS MONEY. NO SUCH THING HAS BEEN DONE TILL DATE. 4. NOT OVEN THAT, THE ASSESSEE WAS UNABLE TO SHOW A LETTER OR PIECE OF CORRESPONDENCE BETWEEN ITSELF & J.S.JAIN AGRO WHEREIN HE HAS OBJECTED TO THIS ADJUSTMENT BILL RAISED BY; J.S. JAIN AGRO. 5. THIS TRANSACTION TOOK PLACE IN F.Y. 2002 - 03 & IT HAS BEEN MORE THAN 10 YEARS & APPARENTLY ASSESSEE HAS MADE NO EFFORT TO RECOVER THE PAYMENT FROM M/S J.S. JAIN AGRO. 6. DURIN G THE PROCEE DINGS BEFORE ME, I ASKED THE ASSESSEE TO ISSUE LETTER TO M/S J.S. JAIN AGRO DISPUTING THIS AMOUNT AND TO GIVE A COPY OF SAME TO ME. EVEN THIS WAS DECLINED BY THE DIRECTORS OF THE COMPANY. 7. THE ASSESSEE COMPANY ON ITS PART DID NOT DO ANYTHING TO DISPUT E THE AMOUNT WITH THE PARTY AT THAT POINT OF TIME OR DURING LAST 10 YEARS OR EVEN DURING APPELLATE PROCEEDINGS. 8. THE ONLY CONCLUSION THAT CAN BE DRAWN FROM THIS CONDUCT IS THAT THE ASSESSEE IS RAISING A BOGEY OF FALSE BILL BEFORE THE DEPARTMENT WITHOU T DISPUTING THE SAME WITH THE PARTY WHO IS ACTUALLY SHOWING THE SALE. THUS, THIS CONTENTION OF ASSESSEE HOLDS NO GROUND. 9. I THEREFORE FIND NO MERIT IN CONTENTION OF ASSESSEE & APPEAL ON THIS GROUND IS DISMISSED. 8 . ACCORDINGLY THE ADDITION WAS CONFIRM ED BY THE LD. CIT(A). AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS. IN SUPPORT OF THE CONTENTION, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE CORRESPONDENCE EXCHANGED BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER. OUR ATTENTION WAS ALSO INVITED TO THE LETTER DATED 10.3.2006 OF THE ASSESSEE WRITTEN TO THE ASSESSING OFFICER , IN WHICH A SPECIFIC REQUEST WAS MADE TO ALLOW AN OPPORTUNITY TO CROSS - EXAMINE THE RESPONSIBLE DIRECTOR OF J SJAI TO VERIFY THE : - 7 - : CORRECTNESS OF THE TRANSACTION ALONG WITH BOOKS OF ACCOUNT. DESPITE A SPECIFIC REQUEST, THE ASSESSING OFFICER HAS NOT ALLOWED ANY OPPORTUNITY TO THE ASSESSEE TO CROSS - EXAMINE THE RESPONSIBLE PERSON OF JSJAI. OUR ATTENTION WAS ALSO INVI TED TO THE AFFIDAVIT OF SHRI. S. S. AGARWAL, DIRECTOR OF THE ASSESSEE - COMPANY STATING THEREIN THAT THE COMPANY HAS NOT PURCHASED ANY GOODS FROM JSJAI NOR SOLD ANY GOODS DURING THE YEAR 2002 - 03 RELEVANT TO THE ASSESSMENT YEAR 2003 - 04 TO JSJAI. 9 . THE LD. COUNS EL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT SINCE THE ASSESSING OFFICER HAS MADE AN ADDITION ON THE BASIS OF THE STATEMENT AND THE DOCUMENTS PREPARED BY A THIRD PARTY WITHOUT AFFORDING PROPER OPPORTUNITY TO CROSS - EXAMINE THE THIRD PARTY, THE ADDITION MA DE ON THE BASIS OF THAT EVIDENCE IS NOT SUSTAINABLE IN THE EYES OF LAW. IT WAS ALSO CONTENDED THAT THE SALES DECLARED BY THE ASSESSEE WERE ACCEPTED IN THE VAT ASSESSMENTS. IT WAS ALSO CONTENDED THAT NO SALES WERE MADE TO THE ASSESSEE AS SHOWN BY JSJAI IN ITS STATEMENT DURING THE PERIOD 2.5.2002 TO 15.5.2002. 10 . THE LD. D.R., ON THE OTHER HAND, HAS CONTENDED, BESIDE PLACING HEAVY RELIANCE UPON THE ORDER OF THE LD. CIT(A), THAT THE ASSESSEE HIMSELF HAS FURNISHED THE DETAILS OF AMOUNT/BALANCE AS ON 31.3.2003 RE CEIVABLE FROM THE DEBTORS AND PAYABLE TO THE CREDITORS AND IN THE DETAILS HE HAS SHOWN DEBIT BALANCE OF ` 17,98,142.70 RECEIVABLE FROM JSJAI. IF THE ASSESSEE HAS NOT PURCHASED ALLEGED GOODS FROM JSJAI, THE ONUS IS UPON THE ASSESSEE TO ESTABLISH AS TO HOW A ND WHEN IT HAS RECOVERED THE OUTSTANDING AMOUNT FROM JSJAI AS SHOWN IN THE DETAILS FURNISHED BY IT AS ON 31.3.2003. TILL DISPOSAL OF THE APPEAL BEFORE THE LD. CIT(A) ON 12.9.2013 , THE ASSESSEE COULD NOT PLACE ANY EVIDENCE TO ESTABLISH AS TO HOW AND WHEN T HE AFORESAID OUTSTANDING AMOUNT WAS RECOVERED FROM JSJAI. THE LD. D.R. FURTHER CONTENDED THAT THE OUTSTANDING AMOUNT IS NOT A SMALL AMOUNT WHICH CAN BE : - 8 - : IGNORED BY ANY BUSINESSMAN. IF THE ASSESSEE HAS NOT PURCHASED THE ALLEGED GOODS FROM JSJAI, AN EFFORT C OULD HAVE BEEN MADE BY THE ASSESSEE TO RECOVER THE AFORESAID OUTSTANDING AMOUNT FROM JSJAI. THEREFORE, THE LD. CIT(A) HAS RIGHTLY TAKEN COGNIZANCE OF THESE FACTS WHILE CONFIRMING THE ADDITION. THE ASSESSEE HAS RAISED OBJECTIONS ONLY FOR THE SAKE OF OBJE CTION WITHOUT DISCHARGING THE ONUS TO PROVE AS TO HOW THE AFORESAID AMOUNT WAS RECOVER ED IF HE HAS NOT PURCHASED GOODS FROM JSJAI AS SHOWN IN THE STATEMENT FILED BY JSJAI. THE ASSESSEE HAS ALLEGED THAT JSJAI HAS MANIPULATED ITS ACCOUNTS, BUT THE ASSESSEE HAS NOT LODGED ANY PROTEST EITHER TO JSJAI OR LODGED ANY COMPLAINT AGAINST IT WITH ANY AUTHORITIES. UNDER THESE CIRCUMSTANCES, THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 11 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD AND THE DOCUMENTS PLACED ON RECORD, WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE - COMPANY FILED THE LIST OF DEBTORS AND CREDITORS VIDE THEIR REPLY DATED 30.5.2005 IN WHICH A SU M OF ` 17,98,142.70 WAS SHOWN AS DEBIT BALANCE RECEIVABLE FROM JSJAI AS ON 31.3.2003. IN ORDER TO VERIFY THE GENUINENESS, THE ASSESSING OFFICER HAS ASKED JSJAI TO FURNISH THE COPY OF THE ACCOUNTS IN THIS REGARD. CONSEQUENTLY COPY OF ACCOUNTS WAS FURNISHED BEFORE THE ASSESSING OFFICER WHEREFROM IT IS NOTICED BY THE ASSESSING OFFICER THAT THE OUTSTANDING AMOUNT OF ` 17,98,142.70 WAS SQUARED UP BY MAKING SALES THROUGH VARIOUS INVOICES DURING THE PERIOD 2.5.2002 TO 15.5.2002 FOR A SUM OF ` 17,99,042 AND DEBIT WA S SHOWN AT ` 8 9 9.30 AS ON 31.3.2003 IN THE BOOKS OF JSJAI. THESE FACTS WERE CONFRONTED TO THE ASSESSEE AND IN RESPONSE THERETO , IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT IT HAS NOT MADE ANY PURCHASE FROM JSJAI AS SHOWN IN THE STATEMENT FILED BY JSJAI . ON RECEIPT OF THIS INFORMATION, THE ASSESSING OFFICER FURTHER CONFRONTED THESE FACTS TO JSJAI AND JSJAI WAS ASKED TO FURNISH NECESSARY : - 9 - : EVIDENCE ABOUT RECEIPT OF GOODS AND THE DETAILS OF TRANSPORT BY WHICH THE GOODS HAVE BEEN TRANSPORTED, VIDE LETTER DAT ED 20.1.2006. IN RESPONSE THERETO JSJAI HAS FURNISHED THE DETAILS OF INVOICES ALONG WITH TRANSPORT RECEIPTS OF M/S DEEP GOODS CARRIER, RAILWAY ROAD, SHAMLI IN ORDER TO PROVE THE SALE S DECLARED IN ITS STATEMENT VIDE LETTER DATED 24.2.2006. ALL THESE FACTS COLLECTED BY THE ASSESSING OFFICER FROM JSJAI WERE CONFRONTED TO THE ASSESSEE VIDE LETTER DATED 28.2.2003 AND A SHOW CAUSE NOTICE WAS ALSO ISSUED TO IT. INSTEAD OF FURNISHING ANY CONFIRMATION FROM JSJAI, THE ASSESSEE HAS FILED AN AFFIDAVIT ALONG WITH LET TER CONTENDING THEREIN THAT THEY HAVE NOT MADE ANY PURCHASE FROM JSJAI. THROUGH THIS LETTER THE ASSESSEE HAS ALSO REQUESTED THE ASSESSING OFFICER TO ALLOW CROSS - EXAMINATION OF THE RESPONSIBLE DIRECTOR OF JSJAI. SINCE THE ASSESSMENT WAS GOING TO BE TIME B ARRED, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT VIDE ORDER DATED 17.3.2006. 12 . THOUGH THE ASSESSEE HAS FILED AN APPEAL BEFORE THE LD. CIT(A), BUT DID NOT FILE ANY CONFIRMATION FROM JSJAI WITH REGARD TO THE DEBIT BALANCE SHOWN IN ITS BOOKS OF ACCOUNT AS ON 31.3.2003. THE LD. CIT(A) HAS TAKEN NOTE OF THE FACT THAT ACCORDING TO THE ASSESSEE A SUM OF ` 17,98,142.70 WAS THE DEBIT BALANCE AS ON 31.3.2003 AND IT REMAINED THE SAME TILL DISPOSAL OF THE APPEAL BEFORE HIM AND THE ASSESSEE HAS NOT MADE ANY EFFORT TO RECOVER THE SAID AMOUNT. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE COULD NOT FURNISH ANY VALID EXPLANATION AS TO WHY THE ASSESSEE HAS NOT MADE ANY EFFORT TO RECOVER THE AFORESAID AMOUNT, IF HE HAS NOT PURCHASED ANY GOODS THROUGH INVOICES AS DISCLO SED IN THE ACCOUNTS OF JSJAI DURING THE PERIOD 2.5.2002 TO 15.5.2002. THE LD. CIT(A) HAS ALSO OBSERVED THAT THE ASSESSEE HAS RAISED TECHNICAL OBJECTION TO THE EVIDENCES COLLECTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. FROM THE ORDERS OF THE LOWER AUTHORITIES , WE FIND THAT AFTER COLLECTING THE EVIDENCE FROM JSJAI, THE ASSESSING OFFICER HAS IMMEDIATELY CONFRONTED THE : - 10 - : SAME TO THE ASSESSEE. THEREAFTER THE LD. COUNSEL FOR THE ASSESSEE ASKED THE ASSESSING OFFICER TO AFFORD AN OPP ORTUNITY TO CROSS - EXAMINE THE RESPONSIBLE DIRECTOR OF JSJAI BUT HE HAS NOT MADE ANY EFFORT TO OBTAIN THE CONFIRMATIONS FROM JSJAI OR TO ASK HIM AS TO WHY HE HAS SHOWN SALES IN ITS NAME IN ITS BOOKS OF ACCOUNT. WE ALSO FIND FORCE IN THE OBSERVATIONS OF THE LD. CIT(A) THAT IF JSJAI HAS DONE MISCHIEF WITH THE ASSESSEE OR HAS COMMITTED ANY FRAUD BY SHOWI NG WRONG SALES IN ITS NAME, THERE COULD HAVE BEEN SOME CRIMINAL COMPLAINT OR FIR AGAINST JSJAI. BUT NOTHING HAS BEEN DONE BY THE ASSESSEE AGAINST JSJAI. EVEN TILL FINAL HEARING OF THE APPEAL BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE COULD NOT PLACE ANY EVIDENCE ON RECORD AS TO HOW AND WHEN HE HAS RECOVERED THE OUTSTANDING DEBIT BALANCE OF ` 17,98,142.70 FROM JSJAI NO R DID HE CLAIM IT TO BE AS BAD DE BT IF HE FAILED TO RE COVE R IT FOR ANY REASON. ALL THESE FACTS SUPPORT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS MADE PURCHASE S AS DECLARED IN THE BOOKS OF JSJAI OUT OF ITS BOOKS OF ACCOUNT AND MADE SALE THEREOF AND EARNED PROFIT. SINCE THE ASSESSEE H AS BEEN SHOWING DEBIT BALANCE IN THE NAME OF JSJAI IN ITS BOOKS OF ACCOUNT AND NO PURCHASE WAS SHOWN IN ITS ACCOUNT , THE PURCHASES MADE BY IT AS PER STATEMENT OF JSJAI IS OUTSIDE THE BOOKS OF ACCOUNT , IN WHICH THE INVESTMENT MADE IS TO BE CONSIDERED AS UNE XPLAINED INVESTMENT FOR WHICH ADDITION IS CALLED FOR. SIMILAR IS THE POSITION WITH REGARD TO THE PROFIT EARNED THEREON ON ITS SALES OUTSIDE THE BOOKS OF ACCOUNT . 13 . UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS PROPERLY EXAMINED THIS ISSUE IN THE LIGHT OF THE GIVEN FACTS AND WE FIND NO INFIRMITY THEREIN. ACCORDINGLY WE CONFIRM THE SAME. : - 11 - : 14 . GROUND NO.5 RELATES TO THE AD HOC DISALLOWANCE OF ` 20,000 EACH UNDER THE HEAD GENERAL EXPENSES; OFFICE EXPENSES AND TRAVELLING AND CONVEYANCE EXPENSES. 15 . ON A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCES UNDER DIFFERENT HEADS ON AD HOC BASIS WITHOUT POINTING OUT ANY SPECIFIC DEFECT IN THE MAINTENANCE OF THE DE TAILS OF THESE EXPENSES. THEREFORE, WE FIND NO MERIT IN THE AD HOC DISALLOWANCES AND WE ACCORDINGLY DELETE THE DISALLOWANCES MADE ON THIS ACCOUNT. 16 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.03.2014 SD/. SD/. [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07.03.2014 JJ: 0503 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR